On January 1, 2017, Larmer Corp The Following Exchange Rates Were in Effect During 2017

Essay

On January 1, 2017, Larmer Corp. (a Canadian company) purchased 80% of Martin Inc, an American company, for US$50,000.
Martin's book values approximated its fair values on that date except for plant and equipment, which had a fair value of US$30,000 with a remaining life expectancy of 5 years. A goodwill impairment loss of US$1,000 occurred during 2017. Martin's January 1, 2017 Balance Sheet is shown below (in U.S. dollars): $$\begin{array} { | l | l | } \hline \text { Current Monetary Assets } & \$ 50,000 \\\hline \text { muentory } & \$ 40,000 \\\hline \text { Plant and Equipment } & \$ 25,000 \\\hline \text { Total Assets } & \$ 115,000 \\\hline & \\\hline \text { Current Liabilities } & \$ 45,000 \\\hline \text { Bonds Pay able (maturity: January 1, 2022) } &\$ 20,000\\\hline \text { Common Shares } & 30,000\\\hline \text { Retained Earnings } & \$ 20,000\\\hline \text { Total Labilities and Equity } &\$ 115,000 \\\hline & \\\hline\end{array}$$ The following exchange rates were in effect during 2017:
$$\begin{array} { | l | l | } \hline \text { January } 1,2017 : &U S \$ 1 = C D N \$ 1.3260 \\\hline \text { Average for } 2017 : & US \$ 1 = C D N \$ 1.3360 \\\hline \text { Date when Inventory Purchased: } & U S \$ 1 = \text { CDN } \$ 1.34 \\\hline \text { December } 31,2017 : & US \$ 1 = \text { CDN } \$ 1.35 \\\hline & \\\hline\end{array}$$ Dividends declared and paid December 31, 2017.
The financial statements of Larmer (in Canadian dollars) and Martin (in U.S. dollars) are shown below:
Balance Sheets

-Calculate Larmer's Consolidated Net Income for 2017 if Martin is considered to be a self-sustaining foreign subsidiary (i.e., the functional currency of the foreign operation is different than the parent).